Based on the panel data of 1451 counties in 24 provinces in China from 2007 to 2020, this study uses the multi period multiple difference method to investigate the impact of the development of rural characteristic industries on farmers' income under the national "one village, one product" demonstration village and town policy. Research has found that demonstration policies have a certain positive effect on farmers' income, and this effect varies depending on local fiscal revenue levels, human capital levels, and types of characteristic products. In addition, the demonstration policy has a greater impact on underdeveloped areas or low-income groups, which, to a certain extent, helps to promote regional coordinated development and achieve common prosperity for farmers. Furthermore, from the perspective of the mechanism of action at the county level, demonstration policies have promoted the development of the county economy and promoted the increase of farmers' income through a trickle down effect; From the perspective of the mechanism of action at the enterprise level, demonstration policies promote the agglomeration of agricultural enterprises, the migration of industrial and commercial capital to the countryside, and the increase in revenue of agricultural enterprises, thereby promoting the increase in farmers' income; From the perspective of the mechanism of action at the farmer level, the demonstration policy has improved the level of non agricultural employment, agricultural technology adoption, and agricultural labor productivity of farmers, thereby achieving income growth for farmers.